Dramatic Changes
Middle East Socioeconomic Overview
Report: December 2024
After the dramatic events in Syria, many refugees returned to their lands, hoping to rebuild their lives. Photo credit: rte.ie
1. Table of Acronyms
2. Introduction
There is no doubt, 2024 was an unusual year full of surprises and shocking developments. Whether those changes will lead to positive or negative developments within the Middle East, the matter is still open to debate. Nevertheless, one thing can be surely said is that the end of the conflicts has allowed citizens in the region to breathe a sigh of relief so that they can reconsider their future plans. But fears of renewed conflict will be always present. That’s each person will be monitoring the coming period with great consideration.
3. The Socio-Economic Situation
Egypt
The World Bank is keen helping Egypt in the face of the regional instabilities taking place around it. Photo credit: arabianbusiness.com
A recent report revealed that the private sector in Egypt represents an essential pillar for achieving prosperity and sustainable economic growth, in light of the rapid economic changes at the local and global levels. The World Bank also explained in a recent report that Egypt has taken initial steps to create a business environment conducive to the growth of the private sector, noting the need to maintain a rapid pace of work in partnership with the government and stakeholders to enhance the role of this sector. It pointed out that the private sector is the main driver of innovation and productivity growth, and has a pivotal role in providing job opportunities, especially with the increasing population growth. IT also noted that, over the past decade, Egypt witnessed an average private investment amounting to 6.3% of GDP, which is equivalent to one-fifth of the average of middle-income countries. Egypt has set ambitious goals by 2030, which include raising the contribution of private investment to 65% of total investments, attracting foreign direct investments worth $60 billion annually, and increasing exports to $145 billion.
The report additionally indicated that there are many investment opportunities in strategic sectors such as agricultural industries, manufacturing industries, and information and communications technology, and the World Bank confirmed that Egypt has great potential to become a regional digital center in the Middle East and Africa. The World Bank stressed the importance of improving the link between the Egyptian economy and global value chains, praising the development of efforts made by the Egyptian Trade Facilitation Committee to adopt a new approach based on risk analysis, which contributes to accelerating the process of transporting goods and reducing the time required to clear them from the border. From its end, the World Bank vowed continuouing support to the Egyptian government in implementing its policies for state-owned enterprises, as it works to improve governance and financial management systems. The World Bank is also working to support the government proposal program through strategic consultations aimed at opening the way for private sector investments and strengthening partnerships between the public and private sectors.
Jordan
Despite not mentioning how the developments in Syria might impact Jordan, the Fund is confident that things look positive
The International Monetary Fund released a statement claiming that its Executive Board concluded a review that made $131 million available to Jordan out of a total $1.2 billion program previously agreed upon. The IMF added that Jordan continues to demonstrate flexibility and maintain macroeconomic stability, despite the headwinds resulting from regional tension, noting that this flexibility reflects the Jordanian government’s continued implementation of sound macroeconomic policies and progress in reform. He said that the Jordanian economy continues to grow and that inflation rates are low, but he warned of the impact of the ongoing conflicts in the region and their expansion on economic growth. As for its end-year predictions, the Fund expected growth to slow to 2.3 percent in 2024, from 2.7 percent in 2023. Growth is also likely to continue to contract in 2025, at 2.5 percent, but it is expected to rebound in the following years, assuming the conflict is resolved and the presence of continued sound macroeconomic policies and further progress in implementing reforms. The Fund noted that the unemployment rate in Jordan is still high at 21 percent. The inflation rate is also likely to remain low at around 2 percent, which reflects the Central Bank of Jordan's firm commitment to monetary stability and exchange rate pegs. Also, the current account deficit is expected to widen slightly this year and next, to just under 5 percent of GDP, from less than 4 percent of GDP in 2023, as tourism reveneus decline and prices for major exports fall. The IMF, however, did not mention a crucial element that may weigh heavily down on Jordan in the future, is the recent developments in neighboring Syria and how this will impact the country. Maybe, it is because still things are unknown to what political direction the country is heading into.
Iraq
Iraqi workers pave a street in Baghdad (Reuters)
The spokesman for the Iraqi Ministry of Commerce, Muhammad Hanoun, in a press conference assured the public that the crisis in Syria will not affect the Iraqi economy and its food security. He added in a statement to the Iraqi News Agency that, despite the Syrian crisis, local markets are witnessing great food stability, and do not suffer from any food shortages, as the goods that the citizen needs enter the country from all origins. He explained that Iraq's stock of wheat amounts to 3 million tons, in addition to large quantities of food commodities. He also explained that the government measures, implemented by the Ministry of Commerce, are moving towards securing food supplies, as among those measures is the provision of food supplies through the opening of the hypermarket in the Bayaa area, and 6 other centers to support citizens with food supplies at competitive prices. To further put the public at ease, the undersecretary of the Iraqi Ministry of Foreign Affairs for Bilateral Relations, Muhammad Hussein Bahr Al-Ulum, the government has allocated a budget estimated at $100 billion to support major strategic projects over a period of 3 years. He explained that in light of the security and economic improvement witnessed by Iraq, the government is ready to support a strong return of companies especially when countries such as Greece has declared its strong intent to invest heavily in Iraq in a meeting with the Iraqi Foreign Minister. Moreover, Bahr Al-Ulum explained that the government plans to build a million new housing units, which will provide wide opportunities for international companies, as well as opportunities in the energy sector, as Iraq produces 4 million barrels of oil per day and ranks third in production, and also possesses large reserves of gas. He also pointed out that Iraq seeks to develop the pharmaceutical and food industries with a budget exceeding 3 billion dollars. Considering all these massive developments Iraq is anticipating, the Central Bank of Iraq is moving ahead with digital currency so that to facilitate transactions and the implementation of these plans.
Lebanon
Economic losses from war in Lebanon may exceed $20 billion - L'Orient Today
According to the World Bank, Lebanon’s real GDP growth has been slashed by around 6.6% in 2024 as a result of the conflict, bringing the cumulative decline in real GDP since 2019 to more than 38% by the end of the year. As such, this is symbolic of the intensity of the war and the destruction and mayhem that plaguing Lebanon. Unsurprisingly, it further exacerbates unresolved macroeconomic challenges and highlights the urgent need for comprehensive reforms and targeted investments in critical sectors. In fact, the Bank expects economic activity within Lebanon to decrease by 5.7% in 2024, equivalent to a loss of US$4.2 billion in consumption and net exports. This is because key economic indicators—including GDP growth, inflation, fiscal balance, and trade deficits—are increasingly skewed toward the downside. Moreover, Lebanon’s fiscal position is likely to deteriorate further due to rising financing needs to secure essential services and meet urgent demands, compounded by potentially reduced fiscal revenue—particularly from VAT. With economic troubles increasing, poverty is also becoming worse thus influencing society as a whole. For instance, the United Nations Economic and Social Commission for Western Asia (ESCWA) and the Lebanese Parliamentary Committee on Women and Children have sounded the alarm about Lebanon’s care economy reaching the brink of collapse due to the ongoing war, warning of dire consequences for Lebanese society. It conducted a study that pointed out that the repercussions of the conflict go beyond urgent humanitarian needs, to affect health, education and social infrastructure, which requires reconsidering priorities to deal with care as an essential element for achieving social stability and economic recovery. Basic services are collapsing, and women, who provide the vast majority of unpaid childcare, are shouldering increasing responsibilities amid school closures, displacement and increased need for healthcare, without access to support or resources.
Palestine
The ongoing conflict has caused economic output in the Palestinian territories to plummet, as claimed by the World Bank. Photo credit: al-monitor
The World Bank revealed that the war in the Gaza Strip, which broke out after the events of October 7, 2023, caused an “unprecedented transformation in modern history” of the Palestinian economy. The Bank explained in a report that the GDP of the Gaza Strip collapsed by 86 percent at the end of the first half of 2024, compared to the same period of the previous year, while the GDP of the occupied West Bank decreased by 26 percent, stressing that the ongoing conflict in the Middle East continues to have a catastrophic impact on the Palestinian economy, and is pushing the Strip into an unprecedented crisis. The Bank noted that the ongoing hostilities have led to a sharp decline in economic output and the collapse of basic services in both the West Bank and Gaza Strip, amid a sharp rise in poverty. Also, inflation in the Gaza Strip rose by 300 percent in the 12 months to October 2024, with food prices rising by 440 percent and energy prices by more than 200 percent, due to major disruptions in supplies and difficulties in delivering food aid, according to the bank. Moreover, Gaza's per capita income has plummeted from $2,328 in 1994 to under $200 deepening poverty and displacement. There is also a deepening cash liquidity shortage which was made worse by the destruction of 93% of bank branches and ATMs. As a result, The Bank stated that 91 percent of the population of Gaza is now on the brink of severe food insecurity, emphasizing that 875,000 people are facing emergency levels of food insecurity, while 345,000 are facing ‘catastrophic’ levels. More broadly, all the basic structures of Gazan society have been destroyed: communications networks have been almost entirely destroyed, despite the efforts of local operators to maintain connectivity.
Syria
Despite all the celebrations, the situation of the economy remains to be in peril. Photo credit: almodon.com
With the fall Bashar Al-Assad’s regime, Syrians were in complete shock as the dramatic events unfolded rapidly. Deemed as a significant yet unimaginable event that will be changing the geopolitical landscape of the entire region. For the time being there are hopes that it is a perfect time to make things better in the country through the foundation of a non-sectarian government that would guarantee all humanitarian freedoms. Ten days after the fall of Bashar al-Assad’s regime, blood began to flow through the veins of the Syrian economy, with the Central Bank announcing the resumption of ATM operations, in addition to the recovery of the lira’s exchange rate to trade at levels prior to the fall of Assad, and the main airports in Syria resuming their work. Also, trucks coming from Jordan have returned to Syrian territory amid demands to reconsider sanctions to facilitate reconstruction. On the international level, the European Union called for a review of sanctions on Syria to facilitate reconstruction. European Commission President Ursula von der Leyen said that the bloc will intensify talks with Hay'at Tahrir al-Sham and other factions in Syria, stressing the need to review sanctions imposed on Syria in order to facilitate the reconstruction process.
Although all this sounds positive, Syria has yet to pull itself out of the economic challenges. This means that the caretaker government must find a plan to confront many immediate issues, most notably the fate of the Syrian pound, paying salaries, and securing sufficient foreign currency to stimulate imports. While economic experts express their apprehension about the economic crises and what it will bring during the coming weeks and what conflicts may consequently arise, the broad outlines of the economy of the current transitional phase can be drawn, which is represented by restoring stability to the national currency, activating state institutions, and serving the country, even though at a minimum level. Moreover, the treasury is suffering from a very bad financial situation, as the head of the caretaker government in Syria, Mohammed al-Bashir, denied the presence of foreign currency in the vaults of the Central Bank, saying: "We do not have any foreign currency, and as for loans and bonds, we are still collecting data. So yes, we are in a very bad financial situation." He then noted that it all depends on the foreign currency that will be sent to Syria during this difficult time and that government will continue to provide wages to employees through the central bank’s central reserve.
Cyprus
The Cypriot Parliament recently approved a bill that would improve the life of citizens and increase public revenues. Photo credit: ekathimerini.com
As the Cypriot economy has been acknowledged by all the leading rating agencies to be an ‘A’ rated economy, the country has consolidated itself among the most reliable economies of the European Union. For this reason, President Nikos Christodoulides celebrated such a development by asking banking institutions "to respond to the favorable conditions made possible by the sacrifices of the Cypriot people, to support the economy and society by reducing lending rates and at the same time narrowing the gap between deposit and lending rates". Although banks have yet to react to the President’s request, the Cypriot Parliament voted on a series of important bills that could reshape the island’s economic landscape and support families. Among the most notable pieces of legislation were those addressing corporate taxation, parental leave and childbirth allowances. The corporate bill will be imposing 15% tax on large companies which have an annual revenue more than 750 million Euros. Not only the bill should improve living standards of citizens but would also comply with an EU directive known as “Pillar 2,” which seeks to establish a global minimum tax rate for large corporations. Moreover, the bill passed with ease within the parliament as the government was facing the threat of economic sanctions from the European Court of Justice due to its delayed implementation. As a result, the bill will be affecting around 1,900 companies in Cyprus. While this is expected to boost state revenues by an estimated €200-250 million annually by 2026, businesses have expressed concerns over the measure’s potential to drive them out of the country.
4. The Humanitarian Situation
Egypt
The Royal Norwegian Embassy in Cairo announced a contribution of USD 1.9 million to UNHCR’s Sudan refugee response in Egypt. The funds will increase UNHCR’s capacity to provide protection services for refugees arriving from Sudan, including the more than half a million who have registered with UNHCR in Egypt since the start of hostilities in April 2023.[1]
Jordan
The UNHCR states that there are currently 619,559 registered refugees in Jordan up until the beginning of December.
The proportion of Syrian displaced people registered within the UNHCR for the beginning of December, are distributed as follows:
-184,869 in Amman Governorate (29.8%)
-158,017 in Mafraq Governorate (25.5%)
-121,649 in Irbid Governorate (19.6%)
-91,876 in Zarqa Governorate (14.8%)
-15,879 in Balqa Governorate (2.6%)
-12,364 in Madaba Governorate (2%)
-7,964 in Jarash Governorate (1.3%)
-7,830 in Karak Governorate (1.3%)
-8,377 in Maan Governorate (1.4%)
-5,246 in Ajlun Governorate (0.8%)
-3,878 in Aqaba Governorate (0.6%)
-1,302 in Tafilah Governorate (0.2%)
-308 in other (0.0%)
According to Jordan times, Syrians living in Jordan are closely following the unfolding changes in their homeland, grappling with a mix of hope, concern for loved ones, and uncertainty about their future.[2]
The UN Refugee Agency and Qatar Charity (QC) have signed two agreements amounting to QAR 4,744,585 (some US$ 1,3 million) to support more than 18,000 refugees in Jordan. [3]
Iraq
The UNHCR states that there are currently 334,454 registered refugees in Iraq. Of those, 90,110 live in camps.
The proportion of refugee people (non-camp) registered within the UNHCR up until the beginning of December, are distributed as follows:
-121,682 in Erbil (50.0%)
-40,568 in Dahuk (16.7%)
-32,203 in Sulaymaniyah (13.2%)
-2,439 in Ninewa (1%)
-30,311 in Baghdad (12.4%)
-3,117 in Kerbala (1.3%)
-2,383 in Najaf (1%)
-2,336 in Kirkuk (1%)
-2,287 in Anbar (0.9%)
-7,018 in other areas (0.8%)[4]
Iraq has halted the return of Lebanese refugees by land, restricting the process to air travel due to security concerns in Syria.[5]
After a decade of dedicated service to children, War Child is closing its office in Iraq. The departure according to the organization, is a positive step due to the improved conditions of children in the country.[6]
The Iraqi Federation of Industries (IFI), in collaboration with the International Labour Organization (ILO) and with the generous support of Italy through the Italian Agency for Development Cooperation (AICS), launched the Iraqi National Network for Employers Interested in Empowering and Employing Persons with Disabilities.[7]
Lebanon
[The UNHCR did not update distribution figures for this month.]
Since the beginning of October, the number of registered Syrian refugees in Lebanon is 768,353.
Refugees in Lebanon are distributed as follows:
-288,296 in Bekaa (37.5%)
-218,427 in North Lebanon (28.3%)
-175,498 in Beirut (22.8%)
-86,132 in South Lebanon (11.2%)[8]
Lebanon's Prime Minister Najib Mikati has called for Syrian refugees in his country to return home after the dramatic downfall last week of Bashar al-Assad.[9]
As of 11 December 2024, IOM’s DTM reported around 179,000 IDPs in Lebanon, marking an 80 per cent decrease from pre-ceasefire figures. As of 13 December, 5,417 IDPs remain in 58 collective sites (Disaster Risk Management Unit), mostly in schools or other public or private spaces.[10]
WFP urgently requires US$49 million to sustain emergency operations as winter sets in and as the crisis is far from over.[11]
As winter looms in Lebanon, UNIFIL’s Italian peacekeepers have donated 1500 items including blankets, food, medicines and hygiene kits to hospitals and authorities in south Lebanon for the benefit of those affected by the recent violence across the Blue Line.[12]
Syria
Finn Church Aid has declared that it will return to work, both in our country offices and project implementation in the field. FCA had put its humanitarian operations on hold in early December due to the security situation.[13]
Under-Secretary General of the UN, Tom Fletcher urged support to help Syrians to build better future. In response, acting Prime Minister welcomed this call and promised government’s commitment to protect civilians and aid workers.[14]
Action Against Hunger warned that 90% or civilians in Syria are under the poverty line and with winter quickly approaching, families face new risks.[15]
UK announced a £50 million package of international aid to help the most vulnerable Syrians, including refugees across the region.[16]
Human Appeal, one of the UK’s leading humanitarian aid organisations, announces its latest deployment of aid in Syria and is calling for increased support amid the ongoing humanitarian crisis, particularly for internally displaced families.[17]
Qatar Charity has announced the launch of a humanitarian aid convoy to support the people of Syria, consisting of 40 trucks as the first batch. This effort aims to address their urgent basic needs considering the ongoing crisis they are facing.[18]
Cyprus
UNHCR Cyprus declared that 310 refugee arrivals were detected for the preceding month. They come from Iran, Syria, Somalia, Sudan, and Afghanistan.[19]
[1] UNHCR, Dec 15, 2024, https://www.unhcr.org/eg/49271-norway-extends-support-for-unhcrs-protection-of-sudanese-refugees-in-egypt-as-numbers-rise.html
[2] Jordan Times, Dec 15, 2024, https://www.jordantimes.com/news/local/decade-refugees-syrians-jordan-watch-homelands-transition-hope-concern
[3]OCHA, Dec 9,2024, https://reliefweb.int/report/jordan/under-two-agreements-signed-doha-forum-2024-qatar-charity-helps-unhcr-support-refugees-jordan-and-ethiopia
[4] https://data2.unhcr.org/en/situations/syria/location/5
[5] New Arab, Dec 6, 2024, https://www.newarab.com/news/lebanese-refugees-iraq-cannot-return-syria-amid-rebel-ops
[6] OCHA, Dec 13, 2024, https://reliefweb.int/report/iraq/war-child-closes-its-doors-iraq-leaving-lasting-impact-children
[7] OCHA, Dec 8, 2024, https://reliefweb.int/report/iraq/new-chapter-inclusive-employment-launch-iraqi-national-network-employers-interested-empowering-and-employing-persons-disabilities-enar
[8] UNHCR, Oct 28, 2024, https://data2.unhcr.org/en/situations/syria/location/71
[9] Euro News, December 15, 2024, https://www.euronews.com/2024/12/15/mikati-calls-for-syrian-refugees-in-lebanon-to-return-home-citing-strain-on-resources
[10] OCHA, Dec 16, 2024, https://reliefweb.int/report/lebanon/iom-lebanon-emergency-response-update-5-29-november-12-december-2024
[11] OCHA, Dec 2, 2024, https://reliefweb.int/report/lebanon/lebanon-updates-both-peace-and-donor-support-are-vital-reel-back-hunger-says-wfp
[12] OCHA, Dec 6, 2024, https://reliefweb.int/report/lebanon/essential-items-donated-tyre-benefit-1500-internally-displaced-people
[13] OCHA, Dec 17, 2024, https://reliefweb.int/report/syrian-arab-republic/fca-aims-gradually-resume-project-work-syria
[14] OCHA, Dec 17, 2024, https://reliefweb.int/report/syrian-arab-republic/welcoming-syria-caretaker-governments-commitment-protect-civilians-including-aid-workers-secretary-general-urges-support-syrians-build-better-future
[15] OCHA, Dec 17, 2024, https://reliefweb.int/report/syrian-arab-republic/syrians-face-new-humanitarian-challenges-displacement-crisis-worsens
[16] OCHA, Dec 16, 2024, https://reliefweb.int/report/syrian-arab-republic/uk-announces-ps50m-new-support-vulnerable-syrians-enar
[17] OCHA, Dec 16, 2024, https://reliefweb.int/report/syrian-arab-republic/uk-charity-human-appeal-ramps-aid-syria
[18] Relief Web, Dec 15, 2024, https://reliefweb.int/report/syrian-arab-republic/part-its-reviving-hope-campaign-qatar-charity-sends-urgent-humanitarian-aid-convoy-syrian-people
[19] OCHA, Dec 10, 2024, https://reliefweb.int/report/cyprus/cyprus-monthly-arrivals-snapshot-november-2024